NYSE's Marijuana IPO Doesn't Get Fired Up

A trader works as American flags are displayed on the floor of the New York Stock Exchange (NYSE) in New York, U.S. Photographer: Michael Nagle/Bloomberg

Innovative Industrial Properties had initially planned to start trading Thanksgiving week with the symbol IIPR, but delayed the offering to this week and was supposed to officially open for trading on Wednesday. It was once again delayed until Thursday with shares priced at $20, but quickly traded below that price and was lately selling at $19.60.

The initial public offering or IPO had started out with plans to raise $175 million, but then was dropped to $100 million. The company also originally planned to sell 8.75 million shares, but that got cut to 5 million shares and then again to 4 million shares. On Thursday, the share count declined to 3.75 million shares.

The New York Stock Exchange has made no comment about the IPO despite repeated requests and the company planned no celebratory IPO events at the exchange like a bell ringing moment. The REIT plans on buying facilities associated with growing marijuana and then collecting the rent.

IIPR made two updates to its filing before during the week long delay. The first amendment announced that management could potentially forfeit their zero-cost basis shares. The second confirmed that management would forego those shares. Originally 5 executives would have gotten 15% of the company without putting up any of their own money. Apparently, this might not have sat too well with potential investors according to Matthew Kennedy, an analyst with Renaissance Capital, a Greenwich, Conn.-based manager of IPO-focused exchange-traded funds (ETFs).

Appetite may have cooled for the deal since President-elect Donald Trump named Senator Jeff Sessions as possibly the next Attorney General. Sessions has made numerous anti-marijuana statements in the past and there are worries he could rollback legalization efforts. Many cannabis industry insiders believe and insist it won't happen. However, they concede that if Obamacare, NAFTA and Roe v. Wade are under fire, it isn't inconceivable that legalization of marijuana could come under attack.

IIPR does not own any buildings yet, so $175 million seemed like a pretty rich valuation for a business plan. The company plans to close on a $30 million facility in New York within months. This facility is only for medical marijuana and many in the cannabis industry feel that if recreational marijuana is repealed, they believe medical marijuana will stand. The facility could also be used for indoor farming of other food products.